"Comparative Research on Damages Calculation in Patent Infringement Litigation".

[Comparative Research on Damages Calculation in Patent Infringement Litigation]

-ABSTRACT-

The Patent Cooperation Treaty and other international agreements opened the gateway to simultaneous patent litigation concerning the same or similar technologies around the world. As a result, judges increasingly refer to decisions rendered by their colleagues in other countries. However, legal frameworks and litigation systems vary among countries, resulting in different evidence production or damages assessment rules and practices in patent litigation. Korean courts have been criticized as not awarding sufficient damages compared to the U.S. and other countries, depriving parties of effective remedies for infringement. Some argue that Korea’s legal structure relating to evidence production makes it difficult for patentees to prove damages and prevents them from receiving substantive protection. Examining the validity of such arguments and providing solution require a closer look at the approaches to assess damages and relevant trial proceedings in other countries, in order to further develop legal principles and practice in Korea.

This paper seeks to provide an overview of damages calculation methods of other countries, focusing on the U.S., Germany, the U.K., Japan, and China. For each country, the recent trend and overall procedure of patent infringement litigation are introduced, followed by evidentiary procedures, discussing the criteria on whether to accept certain evidence, discovery procedure, or in-camera proceedings. Then the paper introduces the underlying grounds to calculate damages and notable decisions on such grounds. Among lost profits, reasonable royalties, and infringer’s profits, countries vary in their legal culture. Infringer’s profit is popularly used in Germany, while it may not be used as an independent basis for damages but only as an indirect evidence in the U.S. Reasonable royalty is often viewed as the very minimum an infringed patentee is entitled to, even if he or she fails to prove the specific amount of damages. Established royalty carries significant evidentiary weight in determining reasonable royalties, but not all license agreements qualify as the basis for established royalty. The paper also deals with each country’s approach to the issue of apportionment relating to multicomponent products, which is expected to gain more attention in patent litigation and introduces relevant cases. In addition, the paper explores enhanced damages and related cases in the U.S., in light of the possible introduction of punitive damages into Korean legal system.